At the beginning of this year, many considered the economy to be one of the strongest successes of the Trump presidency and his best argument for a second term. That’s when we first set out to identify key features of The Trump Economy. Like everyone else, we had no idea what was about to hit and how it would change most everything.
This is the Nasdaq Stock Exchange in the major financial center of New York City where people can buy and sell stock from publicly-traded companies.
Our journey to define the Trump economy actually began here last January.
Sharyl: Is it safe to say that some of the analysts have Donald Trump's Twitter feed up and are checking that out?
Joseph Brantuk: Yeah, certainly we're living in a very fluid time in terms of information flow, whether it's coming from the administration or other sources
Joseph Brantuk is a Nasdaq executive.
Sharyl: Would you have ever guessed, four or five years ago, that you all would have to be watching the President's tweets, or a President's tweets?
Brantuk: I just think it's the world we live in now. It's just the new world, the new reality.
We sought an assessment about the Trump economy from an economist who doesn’t support Trump. Martin Neil Baily of the Brookings Institution headed up the Council of Economic Advisers under President Clinton.
When we spoke early in the year, the economy was on a high and we had no idea the coronavirus shutdown was looming.
Sharyl: If you had to explain to somebody what you see as the features of the Trump economy, what would you say?
Martin Neil Baily: Well, I would say there's good news and bad news. The good news is that we have had this very low unemployment and very low inflation. So that's definitely good news. But that there is also I think a number of danger signs. One is that the underlying growth rate of the economy, the trend growth rate or what we can achieve over the longer run, does not seem to have changed. And then productivity growth has remained pretty slow. It's been slow since about 2004, 2005. And it hasn't really speeded up much in the last few years.
Sharyl: Are there specific things that President Trump has done that you think are responsible for some of the positive features of the economy?
Baily: Well, the fact that he cut taxes. And I don't necessarily like the way he cut taxes, but he cut taxes and it was a fiscal stimulus and it spurred the economy, it spurred economic growth. So it's one of the reasons why we have such low unemployment. And so yes, I'd say that that has certainly worked to give us this very low unemployment.
Also early this year, we got an assessment from a Republican who didn’t vote for Trump in 2016. Steve Forbes.
Steve Forbes: The flat tax would be simple. You could fill it out on a postcard.
Forbes ran for president in 1996 and 2000 touting a flat tax of 17% for everyone above a certain income level.
Sharyl: I don't know where you stood before the last election. Did you support a candidate, a Republican?
Forbes: No. I was picking, liking this about this person, that about that person.
Sharyl: Would you have guessed president Trump would have done the things he did, which you seem to like in retrospect now?
Forbes: Didn't know at the time. His instincts were certainly, "Get out of the way. Let things be done." Builders like to get things out of the way, make things happen. But I think it's turned out to rather well.
Forbes told me he’ll be voting for Trump this time around.
Sharyl: What would you say are a couple of key components of The Trump Economy, whatever that means?
Forbes: Well, The Trump Economy means that we're growing again. We are creating jobs. Wages are going up. For example, lower income earners are now, their wages are rising faster than those of middle or higher incomes. So the gap is starting to close. And what gets overlooked entirely is that the group in America that is starting more businesses than any other group, Latino community. African Americans in the last three years have started to see after a flat line for years a surge in new business formations.
Not long after that interview, coronavirus hit. The Trump administration shut down the us economy for health reasons. The stock market crashed. Unemployment soared. The Trump economy changed in an instant and bragging rights flew out of the window.
Projections by the Congressional Budget Office estimate coronavirus will cost the U.S. economy nearly $8 trillion dollars over the next decade.
Sharyl: Do you think that going into this election, we are now in a state of economic emergency?
Peter Morici: No, we're not in an economic emergency.
Economist Peter Morici.
Sharyl: What was The Trump Economy before and what has it come to be during coronavirus?
Peter Morici: Well, The Trump Economy was doing reasonably well as compared to the Bush and the Obama years. The growth was a bit more rapid and income inequality was actually starting to shrink. Minorities, women, the handicapped, were all experiencing more robust opportunities in the past, opportunities not just for wage increases, but actually to improve the kinds of jobs they held. So, it was a very good and healthy economy, but as we know, the virus essentially shut everybody down and we're coming back at about four-fifth speed.
Amid the devastation there have been some surprises. The housing market is booming. The number of people out of work was epic but not nearly as bad as some predicted: down to 7.9% in September from above 14% in April.
And the stock markets, while up and down, have gained back all the ground they lost when coronavirus struck, and reached more record highs.
Sharyl: How do you reconcile how bad things are with the economy, but how good things look in the stock markets?
Morici: It's very simple. 80% of the economy is doing quite well on average. And within that, say two-thirds, three-quarters is doing really, really well and another quarter is doing poorly. That's what's represented in the stock market. This is a small business recession largely. And in some limited measure, it's a permanent change in the conditions and prospects of the oil industry, the airline industry and the tourism industry. The rest of the economy is booming along. Manufacturing's recovering. The technology sector is doing really, really well. Apple's ordering up lots of new iPhones for Christmas. And so the stock market reflects that.
Sharyl: Do you think that in terms of spending, coronavirus brought Democrats and Republicans closer together than they've been in a long time, because all of a sudden everybody wanted to spend and thought we needed to spend a great deal of money?
Morici: We need to spend more money than the Republicans in the Senate would like, and less than the Democrats in the House think we need. We do need to support people's incomes so they can continue to live decently. We have people right now in Queens, those are the folks at the other end of the L train in New York City that run all those service establishment standing online for hours with cardboard boxes to collect enough food to get through next week and to feed their children. We need to support them in the near term so we can figure out what to do with them.
Just days before the 2020 election. Joe Biden is hammering away at Trump for the economic troubles.
Former Vice President Joe Biden: His failures not only cost lives. It sent our economy in a tailspin. It cost millions more in American livelihoods. This is a recession created by Donald Trump's negligence and he is unfit for this job as a consequence of it.
President Trump is still touting his leadership on the economy as a success story.
President Donald Trump: But, who would have thought, just who would have thought that the stock market is at record levels right now? Record levels.
And back at Nasdaq, they continue to ride the waves.
Sharyl (on camera): The NASDAQ hit a record high last month, closing at just over 12-thousand. It saw over 40 closing highs just this year alone.